NEC has pulled out of the hard disk drive production business, a move that follows a similar decision by Fujitsu earlier in the year.

The company currently operates one plant in the Philippines, the result of a license agreement with IBM, which produces 3.5 inch disk drives which are supplied to IBM. 1400 workers will be laid off as a result of the decision.

“The current production contract with IBM will expire in December,” said Kosuke Yamauchi, a spokesman for NEC. “If we want to enter new production we will have to invest more money, but we cannot expect a worthwhile return (on additional investment).”

The company’s announcement comes at a time when its earnings figures are suffering, which showed significant losses in its PC components and semiconductor division.